As you seek out a financial professional, you’re likely to come across individuals who call themselves financial planners. It’s a phrase that encompasses many types of services and skills. Here’s what you need to know about financial planners.
Who They Are
Financial planners can come from a variety of backgrounds and offer a variety of services. They might be brokers or investment advisers, insurance agents or practicing accountants—or they might have no financial credentials at all. Some will examine your entire financial picture and help you develop a detailed plan for achieving your financial goals. Others, however, will recommend only the products they sell, which might give you a limited range of choices.
Who Regulates Them
Unlike other professions discussed in this section, the financial planning profession doesn’t have its own regulator. Instead, individuals who call themselves financial planners may be regulated in relation to other services they provide. For example, an accountant who prepares financial plans is regulated by the state Board of Accountancy, and a financial planner who’s also an investment adviser is regulated by the Securities and Exchange Commission or by the state where the adviser does business.
If a planner you’re considering uses a particular professional designation, check out that credential using our Professional Designations lookup tool. Some financial planners might use designations that require little experience, study or continuing education—or that lack processes for verifying whether the person actually holds the credential or for filing complaints. Other planners might hold a credential that is far more difficult to get and to keep, such as the CERTIFIED FINANCIAL PLANNER™ designation, or CFP®, issued by the Certified Financial Planner Board of Standards. This certification requires at least three years of experience, imposes fairly rigorous standards to earn and maintain, allows investors to verify the status of anyone claiming to be a CFP and has a disciplinary process.
But be aware that a designation is not the only criteria upon which to base your financial planner selection.
What They Offer
The breadth and depth of services a financial planner offers varies. Some create comprehensive plans that delve into every aspect of your financial life, including savings, investments, insurance, college savings, retirement, taxes and estate planning. Others have a more limited focus, such as insurance or securities. Some only prepare plans, while others also sell investments, insurance or other products. If they sell products, their recommendations typically will correspond with the products or services they sell. For example, an insurance agent will tell you about insurance products (such as life insurance and annuities) but likely won't discuss other investment choices (such as stocks, bonds or mutual funds). You'll want to make sure you fully understand which areas of your financial life a particular planner can—and cannot—help with before you hire that person.
Learn more about working with an investment professional.